House prices begin recovery

The Grand Arch, located in Sector 58, Gurgaon

The Grand Arch, located in Sector 58, Gurgaon

Property prices in major cities are just beginning to move up, says the latest quarterly update of the NHB Residex.

The trend is borne out by the GDP data for 2012-13 too, released on Friday. For the fourth quarter of the year, construction has turned around to record a growth rate of 4.4 per cent against 2.9 per cent in the previous quarter. This trend is reflected in the Residex numbers too.

The Residex, developed by the National Housing Bank with inputs from RBI and CSO tracks the movement in prices of residential properties on a quarterly basis since 2007. It has emerged as a rich source of data for the sector which is thankfully unbiased.

As per the index for the quarter January-March, 2013 prices of properties are firming up in twelve of the 20 cities that the Residex tracks. Of course there are wide variations among them too. The variations range from 0.52 per cent in Indore to the steep 28.74 per cent in Jaipur. On the negative side, ie where prices have dipped are eight cities with the downturn being the least at -0.54 per cent in Vijaywada to -7.84 per cent in Guwahati, quarter on quarter. But the rise in the index for the quarter January-March, demonstrates that in majority of the cities some pricing power is returning to the sector compared to the previous quarter.

Read more: Indian Express

Prices Likely to Rise By 2014

With the Noida, Greater Noida and Yamuna Expressway authorities announcing a substantial hike in land allotment prices, one wonders how expensive it will be now to buy land. Also, will this move have a major impact on the 2,00,000 units currently under various stages of construction in Noida and Greater Noida? The announcement will have a national impact on prices, say real estate experts. The increase will not just be limited to the recent hike. Developers will see this as an opportunity to add to the additional expenses the increased construction and financing costs (with inflation factored in). There is also the likelihood of an increase in prices of new launches in the future, provided new parcels are allotted. Even if there is a clear visible pipeline of stock in the market, price will go up for the new round of allotments. According to research done by Knight Frank, early 5.20 lakh residential units are under various stages of construction in the NCR market, almost 50 percent of which is expected to be ready for possession by the end of 2014.

Source: Hindustan Times (Delhi edition)

New MPD 2021 Pushes Land Prices Up

Kapashera’s and Najafgarh’s sub-registrar offices, which are handling the revenue operations of southwest Delhi, are flooded with registrations of agricultural land, according to reports. These areas fall in the residential, public utility or facility corridor demarcations in the zonal plan of Zone-L, which is located between NH-8 (Jaipur Highway) and NH-10 (Rohtak Highway), in the Master Plan for Delhi-2021. The Delhi Development Authority (DDA) has divided Delhi into 16 zones for ease of administration. The government has limited the period of public suggestions and objections to its New Residential Zones’ Land Pooling Policy, published on April 18, to 45 days instead of the normal 90 days’ period, showing its keenness to implement MPD 2021. This has converted the peripheral residential zone land in Delhi into money-spinners for investors. According to some reports, around 80 registrations are being done at each sub-registrar’s office every day, out of which the maximum transactions relate to the residential zones.

Read more:  The Times of India (Delhi edition)

Real Estate will Lift in 2013-14

Despite the current slowdown in the real estate sector, developers and some consultants say that market will do better in 2013-14 than it did in 2012-13. Sachin Sandhir, managing director of RICS South Asia, says: “With the macroeconomic environment keeping potential buyers in a wait-and-watch mode, 2012 saw the residential real estate market in India struggle.” RICS is the world’s largest body of real estate professionals and surveyors; it sets the standards for valuation of real estate. Sandhir said that factors like high interest rates, rise in labour costs and inflation continued to impact buyer sentiments, which led to a fall in sales overall. Consultants like Cushman and Wakefield, and Nomura, said that returns from real estate in 2013-14 would take a beating because of a slowdown in the economy. Unlike 2012-13, when the returns from residential real estate were in the range of 30-40 percent in various cities of the country, 2013-14 is likely to be a subdued year when the returns could be in the range of 10-20 percent, Cushman and Wakefield said in a report.

Read more:  The Times of India (Delhi edition) 

Property sellers without PAN face 20% tax hit

Those selling immovable property without disclosing their permanent account number ( PAN) are in for a tough time with the government mandating a 20% tax deduction at source (TDS) in such transactions.

The new rules that came into effect from Saturday require buyers of immovable property, other than agricultural land, to pay TDS of 1% of the deal size for transactions in excess of Rs 50 lakh.

The proposal, which was announced in the Budget, was notified on Friday, income tax (I-T ) department officials said. The move is part of the government’s drive to clamp down on black money in the system, with real estate transactions seen as a major source of generation of black money.

While the rules would result in a check on the “white” component of the transaction , as often sellers insist that a large part of the consideration be paid in cash to skirt the capital gains tax. In many cases, where the seller has undisclosed income, cash comes into play and the share can be as high as 50%. The deal size is also underreported to avoid stamp duty.

Read more: The Economic Times

Banking

Corporation Bank to offer housing, vehicle loans at base rate

Ajai Kumar, Chairman and Managing Director of CorporationBank, addressing a press conference in Mangalore on Friday.A.L. Daultani (right) and B.K. Srivastav, Executive Directors ofthe bank, are also seen

Corporation Bank will offer housing and vehicle loans at 10.25 per cent for certain slabs from June 1. In fact, 10.25 per cent is Corporation Bank’s base lending rate.

Addressing presspersons here on Friday, Chairman and Managing Director Ajai Kumar said the “monsoon bumper offer” would be in force from June 1 to September 30.

Under this offer, housing loans up to Rs 50 lakh would be offered at a floating rate of 10.25 per cent. Loans above Rs 50 lakh would be offered at 10.50 per cent. There would not be any processing charges or pre-payment penalty, he said.

The interest on vehicle loans of up to Rs 5 lakh would be 10.45 per cent, and for loans above Rs 5 lakh and below Rs 10 lakh, 10.40 per cent.

Vehicle loans above Rs 10 lakh would be offered at an interest rate of 10.25 per cent. Asked about the reason for offering vehicle loans above Rs 10 lakh at base rate, Ajai Kumar said many people were going for vehicles in that range. Earlier, the bank thought of fixing it at Rs 25 lakh. “Then we saw that many people go for vehicles in the Rs 10 lakh range,” he said.

The bank was expecting to get fresh business of about Rs 4,000 crore during the ‘monsoon bumper offer’ period, he said.

Stating that retail lending was a focus area, he said retail credit had registered 39 per cent growth during 2012-13.

Read more: Business Line

Infrastructure

Stalled road projects to get new life as land requirement eased to 80%

With as many as 30 national highway projects worth around R45,000 crore stalled due to difficulties in achieving financial closure, the government has removed the main hurdle by reducing the land requirement to 80% from the earlier 100% for banks to start disbursing loans to road projects.

The breather will immediately benefit 30 road projects which could not achieve financial closure though the stipulated period of 180 days had expired as banks were insisting on 100% land availability before disbursal of loans. New projects can also avail this benefit.

This easing of norms comes after the National Highways Authority of India (NHAI) took up the matter with the ministries of finance and roads on getting representations from the developers about the difficulties in getting loans. The NHAI contended that the banks need not worry about the developers repaying the loans with a lower land requirement as the rules allow collection of toll fee even after completion of 75% of the project. According to the rules, NHAI has to acquire the land and hand it over to the developer before the given date.

Read more: Financial Express

Ministerial group soon to fast track clearances for infra projects

The government has decided to set up a special inter-ministerial group to fast-track clearances to R7 lakh crore-worth infrastructure projects that are stalled.

This special group of secretaries and senior officials from finance ministry, and other infrastructure-related departments including roads, power, coal, steel, environment and forests will assist the Cabinet Committee on Investments (CCI) in expediting various regulatory and other clearances including on land, environment, forest as well as lack of fuel-linkage to these core-sector projects and help them achieve financial closure, official sources told FE.

The meeting, initiated by the Prime Minister’s Office, assumes significance as around R53,000 crore worth loans have already been disbursed to these stalled projects. It comes in the wake of the country’s GDP falling to a decade low of 5% in the last fiscal. The CCI has already cleared projects worth over R70,000 crore.

Read more: Financial Express

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